Dena fy2012 q1-1


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Dena fy2012 q1-1

  1. 1. Q1 FY2012Operating Results DeNA Co., Ltd.
  2. 2. Q1 FY2012 Highlights  Revenue*: 47.6 billion yen (+37% YoY) Operating Profit: 18.4 billion yen (+22% YoY)  Took measures to improve Mobage Japan user environment based on the guidelines established by the Social Game Platform Liaison Council, including countermeasures against real-money trading (RMT), monthly spending limits for young users and terminating usage of the complete gacha game mechanic.  Moba-coin consumption grew while implementing above measures.  As of August 9, Rage of Bahamut, developed by Cygames, Inc., and provided on Mobage West, has been in the number one spot on U.S. Google Play’s top grossing chart for 17 consecutive weeks; the title also reached number one position on the U.S. Apple App Store’s top grossing chart and maintained a high ranking. *DeNA adopted International Financial Reporting Standards (IFRS) as of Q1 FY2012. The year-on-year changes are based on the FY2011 figures restated in accordance with IFRS. 1
  3. 3. Overview of Consolidated Financial Results IFRS was adopted beginning Q1 FY2012. FY2011 figures have been restated in accordance with IFRS. (Unit: Billion yen) Item Q1 FY2012 Q1 FY2011 YoY change Q4 FY2011 QoQ change Revenue 47.6 34.6 +37% 42.8 +11% Operating profit 18.4 15.0 +22% 17.6 +5% Profit before tax 18.1 15.7 +15% 17.9 +1% Profit for the period attributable to owners of the 10.0 8.3 +20% 9.4 +6% parent Major factors affecting FY2011 operating profit figure due to change in financial accounting standards Positive: Termination of goodwill amortization (2.6 billion yen) Negative: Part of acquisition costs of overseas subsidiaries originally booked as goodwill under Japanese GAAP was recorded as expense under IFRS (3.6 billion yen) Negative: Consolidation timing difference (2.1 billion yen) The total impact for FY2011: -3.1 billion yen, Q1 FY2011: -800 million yen, Q4 FY2011: -1 billion yen 2
  4. 4. Revenue, Operating Profit and Margin by Segment Revenue Operating Profit and Operating Profit Margin (Billion yen) (Operating Profit: Billion yen) (Operating Profit Margin : %) 500 50 47.6 200 20 Operating profit 18.4 Operating profit margin 17.6 42.8 60 400 40 15.0 14.7 34.6 34.7 150 15 50 34.3 43.4 42.5 12.9 41.0 37.7 38.6 300 30 40 100 10 30 200 20 5 20 50 100 10 10 00 0 0 0 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 FY2011 FY2012 FY2011 FY2012 *IFRS was adopted beginning Q1 FY2012. FY2011 figures have been restated in accordance with IFRS. 3
  5. 5. Cash Flows (Unit: Billion yen) YoY Item Q1 FY2012 Q1 FY2011 change Cash flow from operating activities 6.0 -4.1 +10.0 Cash flow from investing activities -3.7 -2.1 -1.6 Cash flow from financing activities 1.8 -5.4 +7.2 Cash and cash equivalents at the end of quarter 58.4 49.3 +9.1 *IFRS was adopted beginning Q1 FY2012. FY2011 figures have been restated in accordance with IFRS. 4
  6. 6. Social Media Business (Billion yen) Revenue 41.5 Advertising 38.5 2.2 Banner ads, tie-up ads, ads matched to content/search, 2.8 Others affiliate advertising (other companies media), etc. 31.0 30.9 Avatar-related 30.5 3.7 Everystar, etc. 3.3 3.1 Item billing, in-game ads, 39.3 Game-related developer advertising, mixi 35.7 mobile applications (ad/payment programs), 27.3 27.6 27.4 overseas business, etc. *Revised as of Aug 10, 2012 (Billion yen) Items Before Revised Social Media Business Revenue Total 32.0 31.0 Q1 FY2011 Game-related Revenue 28.3 27.3 Social Media Business Revenue Total 38.6 38.5 Q4 FY2011 Game-related Revenue 35.8 35.7 Q1 * Q2 Q3 Q4 * Q1 Note 1: IFRS was adopted beginning Q1 FY2012. FY2011 figures have been FY2011 FY2012 restated in accordance with IFRS. 2: The above figures are prior to consolidation eliminations. 5
  7. 7. E-commerce Business (Billion yen) Revenue 4.0 3.8 3.9 3.6 3.7 0.2 0.2 0.2 0.1 0.1 Others 1.2 1.1 1.1 1.2 1.2 MOBAOKU Paying members : 1.09 million (as of Jun 30, 2012) 1.4 1.2 1.2 1.3 Transactions handled: 10.5 billion yen 1.3 bidders (+3.6% YoY) Shops: 4,056 (as of June 30, 2012) 1.3 1.4 PAYGENT Payment processing volume continues 1.1 1.2 1.0 to grow steadily Q1 Q2 Q3 Q4 Q1 Note 1: IFRS was adopted beginning Q1 FY2012. FY2011 figures have been FY 2011 FY 2012 restated in accordance with IFRS. 2: The above figures are prior to consolidation eliminations. 6
  8. 8. Mobage Japan: Moba-coin Consumption Trends  Coin consumption increased quarter-on-quarter despite the termination of complete gacha game mechanics, adoption of monthly spending limits for young users and implementation of other measures to improve the user environment.  Monthly coin consumption remained consistent even after the implementation of above- mentioned measures began in May.  Moba-coin consumption on smartphones in July reached approximately 44% of total coin consumption. Moba-coin Consumption* (Japan only) Quarterly Monthly (Billion Moba-coins) (Billion 60 Moba-coins) 600 54.1 内製・協業 First- and Second-party 20 200 51.1 17.7 18.4 18.0 18.3 50 500 オープン Third-party 40.9 15 150 40 400 37.0 33.4 30 300 10 100 20 200 5 50 10 100 0 0 1Q 2Q 3Q 4Q 1Q 4月 Apr 5月 May 6月 Jun 7月 Jul FY2011 FY2012 FY2012* Includes consumption of Moba-coins, monthly membership service fees for social games and ticket sales 7
  9. 9. Mobage Japan: Q2 FY2012 Moba-coin Consumption Forecast Status of Guideline Adaption Guidelines 1st- and 2nd- party 3rd-party Termination of complete Implemented by end of May Implemented by end of June gacha Termination of complete Mostly implemented by June 22, completed Implemented by end of June gacha-like mechanics, etc. implementation by end of June Implementation started at beginning of June To be implemented by end of Clear in-game display and mostly completed as of today August Moba-coin consumption in first- and second-party titles showed no drop after implementing above guidelines; similar performance is expected for third-party titles. Coin consumption will be accelerated by integrating new game elements into existing titles and releasing new titles Q2 FY2012 Moba-coin consumption forecast: 55 billion Moba-coins (+ Appx. 1 billion QoQ) 8
  10. 10. User Environment Improvement The preparation committee chaired by Masao Horibe, Professor Emeritus at Hitotsubashi University, has met to establish a tentatively-named Liaison Council on Improvement of Environment for Social Game Users. The initiative was led by the Social Game Platform Liaison Council, which has determined a set of social gaming guidelines.  Initiatives by Preparation Committee • Lead discussion among experts and industry members to establish an appropriate environment for social game users • Aim to form a tentatively-named Liaison Council on Improvement of Social Game Users’ Environment in October 2012 By forming working groups, the preparation committee is developing detailed steps to build a framework in which social game companies effectively implement voluntary regulations 9
  11. 11. Mobage West: Creating Hit Titles  Coin consumption on Mobage West in July approached $10 million mark  Building hit titles by utilizing efficient and scalable marketing on titles with strong key performance indicators (KPIs) Third-party First- and Second-party • Rage of Bahamut maintaining high • Blood Brothers and Ninja Royale rankings on App Store and Google Play recorded approximately one dollar top-grossing charts in the U.S. and ARPDAU* recently other Western territories • Expand the user base and coin • Building hit titles by growing the user consumption through regionally-focused base through intensive marketing marketing in Europe and planned launch of the iPad version Rage of Bahamut Blood Brothers Ninja Royale (By Cygames, Inc.) (First-party) (First-party) *ARPDAU: Average revenue per daily active user 10
  12. 12. Mobage West: Expanding Game Lineup Expanding first-, second- and third-party lineups  Strategy for expanding lineups • Create first-party titles with proven Japanese game development know-how • Release key titles with globally-recognized strong intellectual properties • Expand attractive game lineup by partnering with leading third-party developers worldwide  Selected titles to be released in Q2 FY2012 First- and Second-party Third-party Galaxy Assault Monster Tracker Fatal Frontier Deity Wars Fantasica Rites of Delta Legend Cards CROOZ, Inc. Silicon Studio Corporation KAYAC Inc. gloops International Inc. Time Teens Metal Shock 3D Card Battle ETERNAL REQUIEM Kingdom Chronicle Monster Monster Pocket Planes Game KLab Global Pte.Ltd. AXEL MARK, INC. Sakurasoft Co., Ltd. NimbleBit LLC …and more titles to be launched during FY2012 11
  13. 13. Bringing Major IPs to Mobile Social Games Worldwide Marvel Marvel: War of Heroes Action-packed card battle game featuring the Avengers and other Marvel characters Planned launch: Fall 2012 About Marvel • One of the worlds most prominent character-based entertainment companies • The Avengers had a massive box office performance exceeding 1.4 billion*. TM & © 2012 Marvel & Subs. *As of August 5, 2012. Information courtesy of Box Office Mojo. Used with permission. 12
  14. 14. Bringing Major IPs to Mobile Social Games Worldwide Transformers Card-battle game based on Hasbro’s Transformers Planned launch: 2012 About Transformers • Worldwide popularity of animated TV series, comic books and three live- action movies • Transformers series’ box office revenue exceeded 2.6 billion* TRANSFORMERS® AND ALL ASSOCIATED CHARACTERS ARE TRADEMARKS OF HASBRO AND ARE USED WITH PERMISSION ©2012 HASBRO *As of August 5, 2012. Information courtesy of Box Office Mojo. Used with permission. 13
  15. 15. Mobage China and Mobage Korea  Enhance game lineup to attract more users • Localize and release Rage of Bahamut China Alliance Partners in China • Promote strategic partnerships with major players ‒ Number of registered users has grown to 5 million as of July 31 • Currently providing over 50 titles on Android and iOS • A few key titles released in 1Q showing strong KPIs ‒ Three Kingdoms Conquest by SEGA (Launched in May) ‒ Fantasica by Silicon Studio Corporation (Launched in June) South Korea • Expand user base via Daum’s user acquisition channels • Currently providing over 30 titles on Android and iOS • Expanding lineup with titles based on major IPs ‒ FINAL FANTASY AIRBORNE BRIGADE planned for launch in August 14
  16. 16. E-commerce Business: Launched Zerostore Service (Available only in Japan) Enables building e-commerce websites with no initial fees or monthly charge • While industry standard is to charge merchants monthly in addition to initial fees, Zerostore offers highly functional e- commerce service at no cost • Over 1,500 merchants signed up during first 10 days after launch Site view (example) Innovative site-building tools • User interface with intuitive control, allowing merchants to drag and drop items without any HTML knowledge Premium optional services to boost sales • Optional links with Bidders, Yahoo! Shopping and Google Shopping • Options include payment settlement services by Paygent, a DeNA subsidiary 15
  17. 17. 1H FY2012 Forecasts (Billion yen) 1H FY2012 1H FY 2011 YoY Item (Forecast) (Actual) change Revenue 97.1 69.3 +40% Operating profit 37.9 29.8 +27% Profit for the period attributable to owners of the 21.4 15.2 +40% parent IFRS was adopted beginning Q1 FY2012. FY2011 figures have been restated in accordance with IFRS. 16
  18. 18. Reference: Breakdown of Expenses (Unit: Million yen) Q1 Q1 YoY Q4 QoQ Item FY2012 FY2011 change FY2011 change Major factors of QoQ change Cost of sales 12,979 6,126 +112% 10,459 +24% Change in accounting treatment: a part of personnel expenses Labor costs 1,214 723 +68% 925 +31% was reclassified from SG&A. Additional vacation accrual was provided. Depreciation and 1,054 567 +86% 947 +11% amortization Outsourcing Increase in outsourced development costs and BAYSTARS- 2,158 879 +145% 1,603 +35% related expenses expenses Commission fees 7,251 3,160 +130% 5,762 +26% Increase in revenue share of second party games Others 1,301 797 +63% 1,222 +6% Selling, general, and administrative 16,277 13,557 +20% 14,761 +10% expenses Personnel 1,999 consolidated employees as of June 30. (1,810 as of Mar 2,752 2,338 +18% 2,907 -5% 31) expenses Sales promotion Increase in the promotion expenses for both domestic and & advertising 5,464 4,976 +10% 4,456 +23% oversea markets expenses Outsourcing expenses 5,713 3,749 +52% 5,231 +9% Commission fees Increased approx.400 million yen due to additional rental fees Others 2,255 1,584 +42% 1,332 +69% and HQ relocation costs Share-based A part of acquisition cost of overseas subsidiaries originally compensation costs 93 910 -90% 835 -89% booked as goodwill was expensed out in FY2011 under IFRS Other income/expenses (Reference) Includes non-operating/extraordinary profit and 58 68 -15% -49 - loss except for financial income/expenses under J-GAAP. (net)*IFRS was adopted beginning Q1 FY2012. FY2011 figures have been restated in accordance with IFRS. 17
  19. 19. Reference: Purpose of Adopting IFRS and its Major Changes  Purpose of adoption  In promoting the expansion of overseas businesses, DeNA aims to secure transparency of financial statements and comparability with other companies by promptly adopting internationally recognized financial standards, as well.  With global capital market in mind, attempt to diversify fund procurement methods in the future  Major changes  Effect on revenue in FY2011 was +0.8 billion yen, effect on operating profit was -3.1 billion yen 1. Revenue  Revenue from item billing: Before IFRS: Record lump-sum revenue at the time of item purchase After IFRS: Record revenue in proportion, in accordance with the progress of transaction (Minor impact on the revenue)  Revenue from e-commerce business: Changed the way of disclosing revenue from Mobaoku monthly subscription fee, etc. from net revenue to gross revenue (No impact on the profit) 2. Operating Profit  Goodwill amortization : Terminated (impact on FY2011: +2.6 billion yen)  Accounting for business combinations: Record part the acquisition cost of subsidiaries as expenses, which used to be recorded as a goodwill under Japanese GAAP (impact on FY2011: -3.6 billion yen)  Outstanding paid leave: Amount equivalent to the remaining paid leave as of the end of each quarter is recorded as accrued vacation expenses (minor impact on the operating profit) 3. Others  Consolidation timing difference: There used to be 3 months lag in the consolidated accounting period of some subsidiaries, and now the consolidated accounting period for all entities is matched.  Presentation of operating profit: Non-operating/extraordinary profit and loss (except for financial income/expenses) reclassified to the operating profit  Presentation of profit for the period: (Before IFRS) Excludes minority interests (After IFRS) Includes minority interests (disclose the breakdown) 18
  20. 20. Reference: Changes in P/L Presentation from IFRS to J-GAAP Japan-GAAP IFRS Net sales Revenue Cost of sales Cost of sales Gross profit Gross profit SGA SGA Operating income Other income Non-operating income Other expenses Finance income Operating profit Finance income/costs Other Finance income Includes items such as Non-operating expenses Finance costs FX gain/loss Finance expenses Share of profit of associates accounted Other for using the equity method Ordinary income Profit before tax Extraordinary income Income tax expense Extraordinary loss Profit for the period Income before income taxes and minority interests Attributable to Income taxes Owners of the parent Minority interests in income Non-controlling interests Net income Net income per share Earnings per share Net income per share-basic Basic earnings per share Net income per share-diluted Diluted earnings per share 19
  21. 21. Reference: Mobage Japan As of Jun 30, 2012 Breakdown by Registered Number of Registered Users User Age Group (%) Mobage Social Games 43.07 million Above First- and Third-party 30 second-party 32 42 44 Feature phone 48 917Registered Users by Gender PC 7 202 Smartphone (browser-based) 35 355 42 20-29 Smartphone 16 42 38 38 (app-based) Women 40% Men 10-19 60% 26 20 18 As of As of As of 06/30/10 06/30/11 06/30/12 20
  22. 22. The forecast data contained within this presentation and these presentationmaterials have been determined based on information available to date, butmay contain an element of uncertainty.Please be aware that the actual performance data and similar informationare subject to influence from diverse factors, and may differ from theforecasts presented herein. DeNA Co., Ltd.
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